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Housing Construction in Berlin is Picking up Steam

With the proposed development of the Tempelhof Airport grounds roundly rejected by Berlin's electorate, Berlin’s Senator for Urban Development, Michael Müller (Social Democrat), is now planning to launch an initiative to expedite the construction of new housing in the city. By the end of June, he itends to present an “alliance for housing construction” between Berlin's Senate and the city's boroughs that will permit procedures in the future. The idea is to minimise the red tape that principals and planners have to deal with.  New impulses are certainly needed, because the housing shortage in the German capital is already severe.

Market under Growing Pressure

Time is of the essence, as the situation on the city's housing market is showing increasing strained. The city has registered steady demographic growth since 2004. The balance of new arrivals in the city since 2011 stands at 130,000 – the equivalent of the entire population of a town like Wolfsburg. A medium-term forecast by Berlin's Senate Administration suggests an inflow of another 130,000 residents between now and 2030. Indeed, the forecast does not rule out a population increase by as many as 400,000. At the same time, the residential vacancy rate has bottomed out two percent, the lowest level on record. A balanced market would show a level twice as high. The odd thing being that the city still has land reserves for 220,000 apartments, according to Building Senator Müller. There is, however, considerable opposition to new development projects in many boroughs. It would be great if the concerns inspiring the resistance could be defused.

Support from Building and Planning Authorities

Roughly 6641 apartments were built in Berlin last year. Simply arithmetic suggests that the completions figure should rise to 12,000 new flats a year if the requirement of 137,000 extra units by 2025 is to be met. In order to speed up permit procedures, the boroughs are to be granted another three to six additional staff plus equipment. The initiative is projected to cost five million euros. The fast-growing boroughs of Pankow, Friedrichshain-Kreuzberg, Mitte, Treptow-Köpenick and Lichtenberg will benefit most from the effort. Case workers completing a planning procedure within six months will be rewarded with a bonus payment of 500 euros. Indeed, all of the Senate's funding will be performance-based. Any borough downscaling the number of planning permits will be subject to funding cuts the following year. It is unlikely that any borough will run this risk, though. During the first quarter of the year, Berlin's building authorities approved 4400 apartments – twice as many as in Q1 2013. This makes it quite likely that the year-end total for 2014 might exceed all expectations.